£10,000 invested in BT shares 18 months ago is now worth
BT Group (LSE:BT.A) shares have doubled in value over the past 18 months. That means £10,000 invested then would be worth £20,000 today. Whatâs more, an investor would have received around £700 in dividends over the period.
Back then BT shares were among the hardest to value on the FTSE 100, primarily due to its huge fibre-to-the-premise (FTTP) investments and net debt. However, it continues to present an interesting investment case.
Plenty of moving parts
The latest quarterly results (Q1) tell us a story of a company actively transforming itself. And from a bullish perspective, BTâs operational momentum is clear.
The company continues to deliver on its fibre rollout targets, now covering over 19m premises, with record FTTP demand leading to a 46% rise in net adds year on year. Take-up rates have reached 37%, a market-leading figure, further validating the long-term strategic bet on network investment.
Retail fibre adoption is also climbing steadily, up 32% year on year, while the 5G subscriber base expanded to 13.5m. This also shows continued migration to next-generation connectivity.
Importantly, Openreach is a strong profit driver, with ARPU increasing by 4%. Alongside this, cost efficiencies are flowing through, with labour down 5%, lower energy consumption, and streamlined operations offsetting inflationary pressures.
And this is good to see. The stock started rallying last year after CEO Allison Kirkby set a new target to deliver £3bn of gross annualised cost savings by the end of fiscal year 2029. She noted that the business had hit inflection point of FTTP rollout.
Guidance confirmed, but debt a concern
Recent performance has allowed management to recommit to its full-year and medium-term guidance. On a statutory basis, analysts now see BT trading at 15.7 times forward earnings. This figure falls to 13.6 times for 2026 and 13.2 times for 2027. That seems reasonable for a capital-intensive operator with defensive characteristics.
Dividend stability is also appealing, with payout ratios easing into the 50%-60% range and forward yields near 4%-5%. This suggests some sustainable income-backed returns.
However, there are several reasons for investors to be wary. Headline revenues declined by 3% last quarter, pressured by weaker handset sales and softness in international operations. While record fibre take-up is encouraging, underlying broadband line losses of 169,000 highlight the ongoing competitive intensity.
Crucially, profitability has dipped, with adjusted EBITDA falling 1%, and statutory profit before tax dropping 10%, largely from rising finance costs and depreciation. Most importantly, leverage remains an issue, with net debt close to £20bn, limiting financial flexibility.
All-in-all, BT represents an intriguing proposition. Bulls will see a leaner, future-proofed infrastructure leader trading at modest multiples. Bears will argue that growth is fragile, debt-heavy, and returns muted.
Personally, I donât see the margin of safety Iâd be looking for at the current price. Itâs even trading above its average share price target. I think investors may want to consider other options.
The post £10,000 invested in BT shares 18 months ago is now worth appeared first on The Motley Fool UK.
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James Fox has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
